What Silicon Valley Has Taught Us About Startups

Glory Days

It seems the days of capital fueled ‘unicorns’ unapologetically dancing around Silicon Valley are starting to come to an end. 2015 and the beginning of the new year have provided the tech industry with its fair share of surprises. The effects of mass overvaluation of companies are starting to show in some of the most prominent players in the Valley.

Q1 of 2015 LinkedIn’s and Twitter shares dropped by 20% citing a weak future outlook. Fast forward to February of 2016 and LinkedIn shares again tumbled 43% shedding $11 Billion in value on the companies worst day ever. Even the mighty Silicon Valley is not exempt from the looming tech correction.

Every other day there is a new company valued at over $1 billion. Seemingly they give their products away for free, or their subscription models are obnoxiously structured or atrociously overpriced. Even VC giant Fidelity silently wrote down the value of Snapchat and Dropbox at the end of last year. Contrary to popular belief, as we transition into 2016, it would seem there is a realization that HBO’s ‘Silicon Valley’ Russ Hanneman No Revenue theory may not be as effective as previously thought!

A Different Taste

We really do live in a world where there is nearly an app for everything. The startup and enterprise worlds have been dominated by software-only based applications and infrastructures for years. Kickstarter and Indiegogo were full of aspiring developers trying to make it big with the next version of Mine Craft or Twitter. Although, a developer and investor focus has been shifting towards integrating hardware with new and pre-existing applications and infrastructure.

As micro-controllers and the price of manufacturing come down in price, the Android/iOS app stores have become more saturated with the same apps packaged in ten different ways. Interest is starting to shift focus to the next new era or unsaturated market of the Internet of Things (IoT).

Kickstarter and Indiegogo are full with hobbyist and enthusiast grade projects in which people are buying Raspberry Pi’s and automating anything and everything to simplify their life and potentially parlay their inventions into a viable business.

Smart ovens, smart fridges, smart toilets, and the list goes on and on. If it’s in your house and you can somehow control it with your phone or laptop, you can be guaranteed there is someone out there trying to make it smart with machine learning! It is just a matter of time until we have smart homes that integrate seamlessly with our smartphones.

Looking at tech trends moving forward from 2016 and beyond, it seems that almost all the major players are making some form of wearable or usable device. Products like Microsoft’s HoloLens, Google Glass, Oculus Rift, brain wave technologies like Muse, the smartwatch and Fitbit movement, 3D printers, smart cars, drones, the list is endless of all the amazing technologies in the consumer market.

The writing is on the wall. There won’t be another Facebook, Google+ showed us that. The fact of the matter is, for many applications, market penetration is challenging and comparable to bringing a knife to a gun fight. It is this saturation which is potentially fostering and worsening the looming tech bubble. As room for investors to make large returns on applications or services dwindles, the fight for a sliver of the pie becomes worthless, leaving investors to look for a new and exciting sliver of the pie to taste.

Now more than ever it will be important to not only be sure that your prospective app ideas are validated but that those ideas will be differentiated to compete and have legs in an already dominated market. Asking yourself some of the following questions may be a good way to measure your idea’s validity.

Who is your user base or target audience?

How have others attempted to solve this problem before, and why did their solutions fail or succeed?

Who are your potential competitors?Are there specific benefits for your product over the competition?

Does your idea already exist in the same way you were going to execute it?

SWOT Analysis?

Why will investors invest? What’s their ROI?

Bringing an app to fruition can be an overwhelming experience, especially if access to labour and resources are limited. Our talented team at Uppercut can ease you and your company in the process of researching and understanding your markets, assist in identifying target demographics and ultimately evaluate if your ideas fit into the competitive world of tech startups. If they do fit! Be sure to check out The Importance of Good Design in Appsand how our team can bring your ideas to reality.